Correlation Between SIMON and Udemy

Can any of the company-specific risk be diversified away by investing in both SIMON and Udemy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SIMON and Udemy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIMON PPTY GROUP and Udemy Inc, you can compare the effects of market volatilities on SIMON and Udemy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SIMON with a short position of Udemy. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIMON and Udemy.

Diversification Opportunities for SIMON and Udemy

-0.22

Correlation Coefficient

SIMON  Udemy

Very good diversification

The 3 months correlation between SIMON and Udemy is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Udemy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Udemy Inc and SIMON is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SIMON PPTY GROUP are associated (or correlated) with Udemy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Udemy Inc has no effect on the direction of SIMON i.e., SIMON and Udemy go up and down completely randomly.

Pair Corralation between SIMON and Udemy

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to under-perform the Udemy. But the bond apears to be less risky and, when comparing its historical volatility, SIMON PPTY GROUP is 2.95 times less risky than Udemy. The bond trades about -0.11 of its potential returns per unit of risk. The Udemy Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Udemy Inc on October 9, 2024 and sell it today you would lose (4.00) from holding Udemy Inc or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

SIMON PPTY GROUP  vs.  Udemy Inc

SIMON PPTY GROUP

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Udemy Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Udemy Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Udemy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMON and Udemy

The main advantage of trading using opposite SIMON and Udemy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIMON position performs unexpectedly, Udemy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Udemy will offset losses from the drop in Udemy's long position.

The idea behind SIMON PPTY GROUP and Udemy Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.